The end result of the week was green, but was there reason for it and does it tell us anything for this week?
Monday S&P 500 1.03% | NASDAQ 1.19%
Eleven major companies reported earnings, with one missing expectations. Much of the movement on Monday came as an extension of the Friday rally. A move based on the weaker than expected jobs report. Growth stocks outperformed as lower interest rates would carry a greater impact on their performance.
Tuesday S&P 500 0.13% | NASDAQ 0.10%
Twenty-three major companies reported earnings, with two missing expectations. Markets were little changed on the day. While stock stood steady, fixed income yields did slip on Tuesday. In general, this is a continuation of the last few days.
Wednesday S&P 500 0.00% | NASDAQ 0.18%
Fourteen major companies reported earnings, with three missing expectations. Mortgage rates slipped a little lower as rate hike expectations faded. The 10-year treasury rate, to the contrary, rose slightly on the day. This was a reversal of a recent trend. Not a notable enough increase to think that sentiment has changed.
Thursday S&P 500 0.51% | NASDAQ 0.27%
Eleven major companies reported earnings, with three missing expectations. Initial jobless claims came in higher than expected, but still at a muted level. The jobs data brought markets out of their two-day coma. Employment data is showing signs of softening. The hope is the Federal Reserve Board (FRB) will start getting the signals needed to start cutting rates.
Friday S&P 500 0.16% | NASDAQ 0.03%
Michigan Consumer Sentiment is projected to fall to 67.4 in May. If that holds true, it will be the lowest reading since August of 2023. This was a period where fears were high that a recession was on the horizon. The lack of earnings data and the weaker potential sentiment sent markets higher. Again, weakness is a signal of potential FRB moves.
Conclusion S&P 500 0.55% | NASDAQ 1.43%
Markets advanced for the week, albeit with little decisiveness. Market growth has all but stalled as more data is needed to entice investors. Last week’s message was clear from the FRB; they do not expect that their next move will be a hike. The focus is on the timing of a cut. Earnings data will slow down next week; however, inflation data will be in focus. It should give investors a better read on potential rate cuts later this year.
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Oil fell and markets fell with them. Why did the inflation maker not have a positive impact on equities?
Monday S&P 500 0.02% | NASDAQ 0.14%
Market movement was choppy all day. They ended up roughly unchanged. Investors were digesting elevated Russian activity in Ukraine and mixed earnings data. An outperformer was Bank of America as they capitalized on consumer lending, which will likely slow in the second quarter.
Tuesday S&P 500 1.61% | NASDAQ 2.15%
Stocks came out of the gates smoking hot on Tuesday. Yields were rising, which would typically signal a stronger S&P 500, but it was NASDAQ that led the way. This came as a result of weaker energy prices. That would signal weaker inflation and less impetus for rate hikes.
Wednesday S&P 500 0.06% | NASDAQ 1.22%
Markets ebbed and flowed between gains and losses throughout the day. Crude inventories fell more than expected, causing oil prices to be more volatile on the day. Earnings data performed well with the exception of United Airlines.
Thursday S&P 500 1.50% | NASDAQ 2.06%
The trading day started red hot with the S&P 500 up over 1%; however, that faded immediately. The fade came as yields pressed higher. Equities sold off as inflationary pressures lead us to persistent rate hikes likely throughout next year.
Friday S&P 500 2.77% | NASDAQ 2.55%
The selling continued into Friday. The pressure on yields continued and oil prices continued to ease. Those easing prices did nothing to buoy stocks. Oil prices struggled as a result of continued lockdowns in Shanghai. The lack of demand from that region has dampened prices.
Conclusion S&P 500 2.60% | NASDAQ 3.60%
Oil Prices have softened over the last week. On the surface, this can be seen as a positive as it would signal weaker inflationary pressures over the next several weeks (and if it persists, months). “If it persists” is the key, however. The current move in oil prices has to do with slowing demand as Shanghai remains under a COVID related lockdown. If they were to reopen soon, that demand comes back online. More concerning is the impact their closure will have on supply lines a few months from now. Our demand will deplete inventories and shelves likely will not be restocked in time for that depletion. This will further delay the softening of inflationary factor.
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Any and all third-party posts or responses to this blog do not reflect the views of the firm and have not been reviewed by the firm for completeness or accuracy.